The Reserve Bank has cut the official cash rate to a record low, but how much of the reduction ends up in borrowers' hands will be up to the retail banks.
The early signs are not good.
As expected by a majority of economists, the central bank cut its key rate to 1.5 per cent from 1.75 per cent at its monthly board meeting on Tuesday.
The decision came in the wake of recent figures showing annual inflation at a 17-year low, and at just one per cent, it is way below the two to three per cent target band.
"Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time," central bank governor Glenn Stevens said in his post-meeting statement.
He also said recent data suggests overall growth is continuing at a moderate pace, despite a "very large decline" in business investment.
The nation's largest lender, the Commonwealth Bank, was quick to respond to the first rate cut since May, but only reduced its standard variable rate by 0.13 per cent.
However, it did increase its deposit rates by 0.50 to 0.55 per cent - good news for savers.
"Given increased funding costs and capital requirements, today's announced changes seek to balance the needs of both customers and shareholders," the bank's Matt Comyn says.
Treasurer Scott Morrison said the banks had no excuse not to pass on the official rate cut, but added it was not often when there is a reduction depositors actually get a bit of good news.
"It's usually the opposite," Mr Morrison told Sky News.
It was the fourth official rate cut since the coalition came to power in September 2013.
But Mr Morrison did not believe this was a sign of a struggling economy, rather part of global phenomena of low interest rates, low inflation and low rates of investment.
"We are growing at 3.1 per cent, tell me five advanced economies that are doing better than that, and you won't," Mr Morrison said.
Shadow treasurer Chris Bowen was unimpressed, saying it makes a mockery of the Turnbull government's slogan of "jobs and growth".
"The treasurer ... now needs to have a proper plan, not a slogan, not a three-word election gimmick, but a proper plan to engender more confidence, more investment in our economy," Mr Bowen told reporters in Sydney.
New figures showed consumer confidence jumped in the past week, while a separate survey found businesses being more upbeat in the wake of the federal election.
The weekly ANZ-Roy Morgan consumer confidence gauge surged 2.2 per cent in anticipation of the central bank cutting the cash rate.
The Dun & Bradstreet expectations survey also found respondents in a positive mood, rebounding after the global financial market shake-up after Britain's shock decision to leave the European Union and the immediate uncertainty surrounding the July 2 election.
Businesses are anticipating a solid finish to 2016 with expectations for profits, employment and sales jumping sharply.
